Mario Gabelli becomes the second large Zale's (ZLC) shareholder to come out against the proposed sale to Signet (SIG), saying he may seek a second opinion on the deal's $21/share price in court.

Gabelli, whose funds own 7.45% of ZLC, says in an SEC filing he had "commenced the process to be able to assert appraisal rights" - a legal process that lets shareholders reject a merger deal and instead ask a judge to independently value their shares.

Another large Zale investor, TIG Advisors, is trying to rally opposition to the sale ahead of a vote set for next Thursday, but Golden Gate Capital, which controls 23% of ZLC, plans to vote in favor of the deal.

The efforts of Signet (SIG+0.1%) to acquire Zale (ZLC+0.8%) could be done in by deal adviser Bank of America Merrill Lynch's failure to disclose a conflict of interest.

BAML delivered a presentation to Signet last October in which it recommended to the company it make an offer to buy Zale for $17 to $21 per share. The investment bank then turned around to rep Zale in the merger talks while disclosing only "limited" prior relationships with Signet, according to The New York Times.

The apparent foul-up gives TIG Advisors even more ammunition to convince other Zale shareholders to oppose the merger.

Zale (ZLC) investor TIG Advisors urges shareholders to join it at a special May 29 meeting of shareholders in opposing a $1.4B takeover by Signet Jewelers (SIG), arguing that the $21/share offer is "grossly unfair."

Instead of the price the two diamond sellers agreed upon, TIG says it should be able to get $28.60/share in cash and stock, according to an SEC filing from the 9.5% owner of ZLC shares.